*1 PETIGROW LIPKIND, PRUPIS PLEVA, LAMPF, al. et GILBERTSON 20, 1991 June 19, 1991 Decided February Argued 90-333. No. *2 argued petitioner. the cause for With Theodore B. Olson him on the briefs were Theodore J. Boutrous, Jr., Joel Wilson, and R. Daniel Lindahl. and M. Stephen Shapiro filed a brief for Comdisco, Inc., et I. al., Mark Levy respondents support under this Court’s Rule 12.4, petitioner. argued respondents the cause for Gilbert-
F. Gordon Allen son al. him et With on the brief were and Dod Barry W. M. Berne.* Gary Olson, Ekdahl, Amhowitz,
* Eldon N. Jon Harris J. Liggio, Carl D. and Leonard P. Novello filed a brief for Arthur Andersen & Co. et al. as urging amici curiae reversal.
Leonard Barrack filed a brief for the National Association of Securities Attorneys and Commercial Law urging as amicus curiae affirmance. Briefs of amici curiae were filed for the Exchange Securities and Com- by Starr, Deputy Roberts, mission Solicitor General Solicitor General Mi- Dreeben, Gonson, chael R. Doty, Stillman; James R. Paul and Jacob H. Latt-o, for the American Council of Life Insurance Laiurence J. John Rich, Bamsback, Stano; Townsend Richard E. Phillip and E. for the Court, opinion of delivered Blackmun Justice II-A. Part except toas of limi- statute which determine must litigation we pursuant brought private suit to a applicable tations Stat. Exchange ofAct Securities Exchange Commis- Securities 78j(b), C.S. 15U. (1990), promulgated §240.10b-5 17 CFR 10b-5, Rule sion thereunder. I Connecticut seven sale controversy from arises purchasing purpose formed partnerships
limited Lampf, Petitioner *3 software. and computer hardware leasing Orange, J.,N. West Petigrow is Prupis & Lipldnd, Pleva, that and partnerships organizing in aided firm law preparation including the services, legal additional provided invest- of consequences addressing tax opinion letters plaintiff-respondents several The partnerships. ing during the partnerships of the more or in one units purchased realizing fed- expectation through 1981with years 1979 therefrom. benefits tax income eral part to due failed, partnerships The early 1983, and late wares. their obsolescence States United notice received plaintiff-respondents partner- investigating the was Service Revenue Internal tax claimed disallowed subsequently IRS ships. The and assets partnership overvaluation because benefits motive. profit lack plaintiff- 1987, 4, June and November On United complaints in respective their filed respondents naming Oregon, District for District States preparation in the involved others and petitioner defendants Donaldson, Mi- J. R. Guin, David J. by David Association Investors Bond Industry Asso- Securities Krebs; for and L. Rediker, Thomas chael Asaro, Wil- Clear, J. Leo Walsh, Michael John C. by Thomas ciation Fitzpatrick. J. liam offering memoranda for the partnerships. complaints alleged plaintiff-respondents were induced to invest partnerships by misrepresentations offering in the memo- randa, in among of, violation things, other 1934 Act and Rule 10b-5. The misrepresentations claimed were said to include assurances that the investments would purchasers entitle the to substantial tax benefits; that the leasing of the hardware packages and software gener- would profit; ate a that the readily software was marketable; and equipment that certain appraisals were accurate and reason- Plaintiff-respondents able. they asserted that became aware alleged misrepresentations only in following disallowance the IRS of the tax benefits claimed. After consolidating the actions discovery pretrial proceedings, the granted District Court summary judgment for the ground defendants on the complaints that the were timely App. filed. to Pet. for Cert. Following 22A. precedent of controlling its g., court, e. see, Robuck v. Dean (CA9 Witter & Co., 649 F. 1980), 2d 641 the District Court ruled that the securities governed claims were by the state statute of limitations for analogous the most forum-state cause of action. The court determined Oregon’s this to *4 2-year period limitations for fraud claims, Ore. Rev. Stat. 12.110(1) § (1989). The reports court found plaintiff- that respondents detailing declining the financial status of each partnership allegations and of misconduct made known to the general partners put plaintiff-respondents “inquiry on notice” possibility of the early of fraud as as October App. 1982. Pet. for Cert. 43A. The court also ruled that the distribu- tion of reports certain fiscal the and general installation of a partner previously associated with the defendants did not constitute fraudulent concealment sufficient to toll the stat- ute of Applying limitations. Oregon the statute to the facts underlying plaintiff-respondents’ claims, the District Court determined complaint that each was time barred.
354 and reversed Circuit Ninth for the Appeals Court Leasing Consul- v. g., Reitz e. See, cases. the
remanded order). In (1990)(judgment 1418 2dF. Associates, 895 tants un- that Appeals found Court the opinion, unpublished its dis- plaintiff-respondents when toas issues factual resolved pre- alleged fraud the discovered should or covered Court, District the did as Then, summary judgment. cluded so In period. Oregon limitations 2-year it selected that argument petitioner’s rejected implicitly doing, it claims. 10b-5 Rule apply to period should limitations federal opin- divergence theof view 8A. Cert. for App. to Pet. pe- limitations proper regarding among Circuits ion to address certiorari granted we claims,1 10b-5 Rule riod 894 S.U. 498 issue. important I—l Appeals maintain Plaintiff-respondents from source fraud common-law correctly identified They submit derived. should § limitations which 10(b)litiga- §of practicalities policies underlying practice traditional departure from justify a tion do Pe- limitations. statutes analogous state-law “borrowing” period federal argues hand, other on titioner, “l-and-3- look must we contending that appropriate, causes express applicable year” structure 15 amended, 84, as 1933, 48 Stat. of Act Securities of 13 in the express actions certain 77m, C. S.U. 1990) state (applying (CA9 380 McNeil, 896 F. 2d v. Nesbit g., 1 See, e. Gaims, Bushkin, v. fraud); Bath common-law governing Kovens, v. 1990) (same); O’Hara (CA10 817 Jonas, F. 2d Gaines cert. period), sky blue 1980) state (applying (CA4 2dF. Graham, S. U. Inc. Village, (1981); Forrestal denied, S. 449 U. Systems Access Data (same); In re (1977) 2d 411 F. 225, 551 D. C. App. uniform (establishing (CA3) 2dF. Litigation, Securities Co., U. Kahlowsky & I. Vitiello nom. sub denied cert. period), *5 1990), (CA7 1385 Co., 2d F. Mfg. 908 Shoe Belleville (1988); Short 849 (same). 90-526 No. pending, cert.
355 78cc(b).2 §§78i(e), 78r(c), 1934Act, see 15 U. C. and S. The appearing General, Solicitor on behalf Securities and Exchange agrees period Commission, of a use is urges application 5-year indicated, but statute of §20A repose specified in Act, of the 1934 15 U. S. C. 1(b)(4), §by Trading as added 5 of the Insider Se 78t — curities Fraud 1988, Enforcement Act of 102 Stat. 4681. 5-year period, “Congress’s The it is said, accords with most competing recent views on the accommodation of interests, provides analogy, promises yield the closest federal practical policy litigation.” the best results 10b-5 Rule Exchange Brief for Securities and Commission as Amicus agree 8. For the reasons below, Curiae discussed we that a uniform federal is indicated, but hold that we the ex press causes of action contained the 1933 and 1934 Acts provide the source.
A Congress pro- It is the usual that when rule has failed to vide a statute of limitations for a federal cause of action, a court “borrows” or “absorbs” the local time limitation analogous most to the case at hand. Garcia, Wilson v. (1985); 261, S. 266-267 U. Automobile Workers v. Hoosier Corp., (1966);Campbell 696, Cardinal U. S. v. Ha- (1895). practice, verhill, 610, U. S. This derived from the Act, Rules of Decision 28 U. C. has 1652, en- joyed longevity may sufficient that we that, assume in enact- ing legislation, Congress ordinarily remedial “intends its Agency Holding Corp. silence that we borrow state law.” Malley-Duff Associates, Inc., U. S. exception. rule, however, not without We have
recognized legislature rarely that a state enacts a period with federal interests in mind, Occidental Ins. Co. Life (1977), op- Cal. v. EEOC, 432 U. S. and when the
2Although language, not identical in year all these relate to one after discovery years and to three after violation.
356 poli- frustrate would period limitations a state
eration has Court this enactment, federal by embraced cies e. g., See, period. suitable a for law federal to looked Hold- Agency (1983); 151 S.U. Teamsters, 462 v. DelCostello Co., Petroleum Magnolia v. McAllister supra; Corp., ing the state- from departures These 224 S.U. con- Court’s this motivated been have doctrine borrowing that conclude to “inappropriate be would it that clusion odds at rules state adopt to choose would Congress DelCos- law.” substantive federal operation or purpose 161. S., at U. tello, Congress, expectations in the it is as Rooted We abandoned. lightly be not may doctrine”
borrowing circumscribed closely “a as borrowing federal described elsewhere from rule a ‘when “only made be exception,” available than analogy a closer clearly provides law federal and stake at policies federal when statutes, state more significantly rule that make litigation practicalities Reed lawmaking.’” interstitial for vehicle appropriate (1989), S.U. Union, Transportation United 172. S., DelCostello, 462 U. quoting this Predictably, cases our selected,3 be must a period however, ognizing, bor- federal or state to whether guidance some provide do suited best period toas appropriate rowing we cases these From consideration. action cause ascertaining for inquiry hierarchical distill able are cause a federal appropriate ac- such-an which -within time set has Congress where brought. be must tion intent Congress’ it be found has occasions, this rare On See, g., e. of action. cause upon a imposed limitation time
no party (1977). No EEOC, U. Cal. Co. Ins. Occidental Life enacting purpose Congress’ was argues that litigation present in the intent. such evidence nois there agree 10(b), we a uniform statute determine whether court must First, the a federal cause of ac selected. Where is to be “encompass practice numerous and diverse tion tends *7 subtopics,” 273, at topics Garcia, S., v. U. Wilson and may period single not be consist state such that jurisdiction, ently applied we have concluded within a judicial economy predictability and interests the federal adoption sources, of for source, or class of one counsel the borrowing purposes. ulti 273-275. This conclusion Id., at single provi mately may of a federal in the selection result variety supra, single Holding Corp., Agency or of see sion, (characterizing all ac v. Wilson Garcia actions. See of state § analogous 1983 as to a state-law C. U. S. action). tions injury personal period appropri- assuming is a uniform
Second, this should be decide whether court must ate, the making In a federal source. from a state or derived particular weight judgment, to the should accord the court geographic of the claim: character [the of action at of federal cause
“The multistate nature desirability issue] a uniform federal stat- of indicates multiple possibility state With the of limitations. ute present state statutes would the use of limitations, very shopping danger and, least, at the would forum litiga- complex expensive ‘virtually guarante[e] . . . straightforward matter.’” should be a tion over what quoting Holding Corp., Agency Re- S., 154, U. port ABA Task Force of the Ad Hoc Civil RICO Corporation, Banking and Business Law 392 Section (1985).
Finally, geographic fed- considerations counsel even where presumption borrowing, bor- of state the aforementioned eral analogous rowing requires fed- determine that an that a court truly action fit” with the cause of affords a “closer eral source Although any source. available state-law than does at issue pertinent will neces- this determination considerations 3S8 cause federal upon the depending vary
sarily factors analogues, such state available bewill similarity elements purpose and commonality of relevant. B by the complicated task litigation, our present text 10(b) of action. cause origins theof
nontraditional claims Such private claims.4 for provide does statute implied under having been creation, judicial are Gypsum National v. century. Kardon nearly half Ernst 1946), Ernst (ED cited Pa. Supp. 512 F. Co., Although 16n. 196, 425 U. Hochfelder, v. validity such recognized the has repeatedly this Court Drug Stores, Stamps Manor Chip Blue see claims, Utah Citizens Ute (1975); S.U. Affiliated *8 Superintendent (1972); 128, 150-154 U. S. States, United provides: Act 10 of the Section or any person, for unlawful be “It shall mails, ofor the or of commerce interstate instrumentality of or any means exchange— securities national any facility of any any or sale purchase the with connection in employ, “(b) or To use in contra- contrivance or device deceptive or manipulative any security. . . as may prescribe Commission regulations rules such vention of in- protection for or interest public in appropriate necessary or §78j. S. C. U. vestors.” provides: 1942, now in promulgated 10b-5, first Rule Commission by use indirectly, directly or any person, unlawful “It shall ofor mails commerce, or interstate instrumentality of or any means exchange, securities national any facility of any defraud, scheme, or artifice device, any employ “(a) To state omit fact or material aof statement any untrue “(b) make To made, in statements to make order necessary in fact a material misleading, or made, not were they which under circumstances light of course or act, any in “(c) engage To person, any upon or deceit fraud aas operate would or any sale or purchase connection “in security." 17 CFR § 240.10b-5 Ins. Y. v. Casualty Bankers & Co., 404 U. 6,S. of N. Life (1971), 13, n. 9 pretense we have made no that it was Con gress’ design provide remedy afforded. See Ernst (“[T]here Ernst, S.,U. at 196 is no indication that Congress, or adopting the Commissionwhen Rule 10b-5, con templated (footnotes remedy”) omitted). such It is there surprise provision fore no that the contains no statute of limitations.
In a case such as this, we are faced with the awkward task discerning Congress limitations intended courts really to a cause of action it never knew ex- Fortunately, isted. however, drafters of provided guidance.
We conclude that where, as here, the claim asserted is one implied statute that express also contains cause of action with its own time limitation, court should look first to origin the statute of proper to ascertain the pe- imagine riod. canWe no clearer Congress indication of how policy would have balanced the implicit any considerations provision than the balance struck the same Congress limiting protections. similar and related DelCostello, S., 462 U. at 171; United Service, Parcel Inc. (1981) v. Mitchell, 451 U. (opinion 69-70 concurring judgment). origin When the statute compara- contains express provisions, ble remedial inquiry usually should Only be at an end. analogous where counterpart no is avail- *9 able proceed should a court then to state-borrowing principles. present
In litigation, the there can be no doubt that the contemporaneously express enacted provisions rep remedial resent “a actually statute of designed limitations to accommodate a very balance of interests similar to that at stake here—a statute that analogy is, fact, an to the present apt any lawsuit more suggested than state-law parallels.” DelCostello, 462 S.,U. at 169. The 1934 Act express contained a number of causes of action, each with an 360 restrictive more only one With period. limitations
explicit
1-year
aof
variation
some
includes
these
of
exception,5 each
rep
of
period
3-year
a discovery combined
period after
Congress also
73d
the
Act,
1934
adopting the
In
ose.6
adopting
Act,
1933
the
of
provision
the
amended
contained
action
of
cause
each
l-and-3-year structure
the
therein.7
15
Act,
1934
the
9 of
Section
15
§18,
and
prices,
security
of
manipulation
-willful
the
target
the
filings,
misleading
relating to
§78r,
C.S.U.
10(b).
an
§
Each
of
focus
the
are
dangers that
precise
was
Each
regulations.
of
complex web
aof
integral element
protect investors
“to
goal:
central
a
facilitate
intended
3-year
a
than
rather
2-year
a
sets
5
§78p(b),
C.S.
16(b), 15 U.
Section
un
of
disgorgement
the
requires
provision
Because
repose.
of
period
express
other
the
10(b)
from
and
from
focus
differs
profits
lawful
from
source
appropriate
be
find
action,
dowe
of
causes
here.
borrow
which
provides:
Act
9(e)
the
of
Section
action
“No
con-
facts
the
discovery
the
after
year
one
within
brought
section, unless
violation.”
such
years after
three
within
violation
the
stituting
78i(e).
§ C. S.U.
provides:
Act
18(c)
the
Section
this
under
liability created
any
to enforce
maintained
be
shall
action
“No
con-
facts
discovery of
after
year
one
brought within
unless
section
ac-
cause
such
after
years
three
within
action
cause
stituting the
§78r(c).
C.S.U.
accrued.”
tion
amended, provides:
Act,
soas
of13
Section
sec
under
liability created
any
to enforce
be maintained
shall
action
“No
dis
after
year
one
brought within
unless
title
77l(2)
this
or
77k
tion
discovery
such
omission,
after
or
or
statement
untrue
covery
or,
if
dilligence,
reasonable
exercise
made
been
should
title, un
77l(l)
this
section
under
liability created
enforce
tois
action
based.
it is
upon which
violation
after
year
one
within
brought
less
liability created
enforce
brought
any such
shall
no event
se
after
years
three
more than
77l(1)
title
of this
or
77k
section
section
or under
public,
77l(2)
offered
fide
bona
curity was
§ 77m.
C.S.U.
sale.”
after
years
three
than
more
title
*10
against manipulation of stock prices through
regulation
upon
transactions
securities
exchanges
and in over-the-
counter markets, and to impose regular
reporting require-
ments on companies whose stock is listed on national securi-
ties exchanges.” Ernst
Ernst,
C We therefore conclude that we must reject the Commis sion’s contention that the 5-year period §in contained 20A, added to the 1934 Act in 1988, is more appropriate 10(b) § actions than is the l-and-3-year structure in the Act’s original remedial provisions. The Insider Trading and Securities Fraud Enforcement Act which became law more than 50 years after the original securities statutes, focuses upon a specific problem, namely, the “purchasing or selling a security [of] while in possession of material, nonpublic in formation,” 15 U. S. C. §78t-1(a), is, “insider trading.” Recognizing unique difficulties in identifying evidence of such activities, the 100th Congress § adopted 20A as one of “a variety of measures designed provide greater deterrence, detection and punishment of violations of insider trading.” H. R. Rep. No. 100-910, 7p. There is no indication the drafters §20A sought extend that enhanced protection to other provisions of the 1934 Act. Indeed, § text of 20A indicates the 20A(d) contrary. Section states: “Nothing this section shall be construed to or limit condi tion the right any person to bring action to enforce a requirement of this or chapter the availability of any cause of action implied from a provision of this chapter.” 15 U. S. C. 78t-1(d). §
The Commission further argues that because some conduct 10(b) is violative §of is also actionable 20A, adop- tion of a l-and-3-year structure would subject actions based on § to two different statutes of limitations. But 20A prohibits also insider trading activities that violate sections of *11 362 language The periods. express limitations Act 1934
the sought alter Congress 100th the that clear § makes 20A only in cases, trading insider in available remedies the inconsistency. nois There trading cases. insider Finally, the underlying policies the frustrate repose would period of year l-and-3-year struc- the however, of inclusion, 10(b). § The con- actions express securities range of broad in ture congressional suggests a Acts 1934 1933 in tained Ceres is sufficient. period 3-year that determination 1990). (CA2 349, 363 F. 2d 918 Associates, GEL v. Partners every agree we Thus, ato limitations statute apply a upon to called in contained causes express 10(b) that claim statute appropriate more provide Acts 1934 supra; Partners, Ceres § 20A. See does than limitations 1990), (CA7 2dF. Mfg. Co., Shoe Belleville Short Systems Se Access re Data In 90-526; No. pending, cert. sub (CA3), denied cert. 2dF. Litigation, 843 curities 488 U. Kahlowsky Co.,& I.v. Vitiello nom. Necessarily, we 10(b). analogy to the closest provides fraud state-law that consider- makes adopt above we analytical framework Congress unnecessary where alternatives of state-law ation correlative period for express an provided has enactment.8 same within remedies con period 1-year Kennedy borrow would Justice our repose. accompanying but Act tained determination indivisible represents scheme l-and-3-year view, the statute. for claims point cutoff appropriate to the Congress periods. two sever determination legislative disserve It would borrowing practice cases our support no Moreover, find we practice Indeed, such limitations. statute express anof portion only a borrowing doc our policymaking judicial type close comes avoid. intended was trine ) I—I M —I we Finally, address plaintiff-respondents’ contention that, whatever limitations period is applicable §to claims, that period must be subject to the doctrine of equitable toll- ing. Plaintiff-respondents note, correctly, re- “[t]ime quirements lawsuits . . . are customarily subject Department Irwin ‘equitable tolling.’” *12 Veterans Af- fairs, U. 89, S. 95 (1990), citing Hallstrom v. Tillamook County, (1989). U. 20, S. Thus, this Court has said that in the usual case, “where the party injured by the fraud in remains ignorance of it without any fault or want of dili- gence or care on his the bar part, of the statute does not begin to run until the fraud is discovered, though there be no special circumstances or on efforts part com- party mitting fraud to conceal it from the knowledge Bailey other party.” Glover, 21 Wall. (1875); see Holmberg also v. Armbrecht, U. (1946). 396-397 Notwithstanding venerable principle, it is evident the equitable tolling doctrine is fundamentally inconsistent with the l-and-3-year structure.
The 1-year period, its terms, begins after discovery the facts constituting the violation, making unnec- tolling essary. The 3-year limit is a period of repose inconsistent with tolling. One commentator explains: “[T]he inclusion of the three-year period can have no significance this context other than to impose an outside limit.” Bloomenthal, The Statute of Limitations and Rule 10b-5 A Claims: Study Ju- dicial Lassitude, 60 U. Colo. L. Rev. 235, 288 also ABA Committee on Federal Regulation of Securities, Report Task Force on Statute of Limitations for Im- plied (1986) Actions 645, (advancing “the inescapable con- clusion that Congress did not intend equitable tolling to apply in actions under the laws”). securities Because purpose of the 3-year limitation is clearly to serve as a cutoff, we hold that tolling principles do not that period.
IV 10b-5 Rule pursuant Litigation instituted dis- year after one within commenced must therefore three within constituting violation covery the facts dispute that nois there As violation.9 years such after more filed complaints was plaintiff-respondents’ earliest misrepresenta- alleged petitioner’s years after three than untimely.10 were claims plaintiff-respondents’ tions, judgment so ordered.
isIt concurring part and concurring in Scalia, Justice judgment. accept stare Although I appli- respect the statutes made continue I action, causes particular cable recently very has methodology the Court disagree with my view, making decisions. those purposes of adopted for *13 peri- period state limitations created congressionally absent purposes of the with they inconsistent are if govern, or, ods Agency See period exists. limitations Act, no S.U. Inc., 483 Associates, Malley-Duff Corp. Holding v. peri l-and-3-year various correctly, that notes, 9 The Commission terminology. To in slightly differ Acts in the ods contained we significant, prove might future in the these distinctions extent of language an action standard governing select 78i(e). §C. Act, 15 U. 9(e) of 1990, 104 Stat. Act of Improvements 313(a) the Judicial 10 Section 5114, reads: an Act arising under law, action a civil provided otherwise “Except as may not section of this enactment the date after Congress enacted accrues.” action cause after years than later be commenced shall section by this made “amendments 313(c) states Section [Decem- the date or after accruing on of action to causes respect obviously has statute This new Act.” this 1990,] the enactment ber litigation. present in application no (1987)(Scalia, concurring judgment),
143, 157-170
J.,
in
see
Transportation
also
v.
Reed United
Union, U. S.
(1989) (Scalia,
concurring
judgment).
J.,
present
presents
difficulty
case
a distinctive
because it
“implied”
involves one of those so-called
causes of action that,
prone
for several
decades,
Court was
to discover
or,
in—
accurately,
more
upon
legisla
create
reliance
—federal
Thompson
(1988)
tion.
Thompson,
When confronted with this thing situation, to be (and applying my ordinary said for pre-1983 the Court’s tra- ditional) rule is possibly that the unintended and irrational certainly judicial results will deter invention of causes of ac- goal, tion. unworthy That is not pursue but to it in highly unjust fashion would be litigate to those who must past approach inventions. An say alternative would be to *14 “implied” that since we ought the cause of action we “imply” appropriate an statute of limitations as well. That is just enough, imagined. but too lawless to be It seems to me responsible approach, the most where the enactment that has been the occasion our for creation of a cause of action contains analogous a limitations for an action, cause of is to use Court the agree with IAnd imagining here. areWe that. Congress howof indication clearer imagine no “[w]e can that any implicit in policy considerations the balanced have would by same the struck balance the than provision Ante, protections.” related limiting similar Congress in 359. at Court, the of judgment join the I opinion. Court’s the of joins, Souter Justice whom Stevens, with
Justice dissenting. lawmaking task a undertaken has Court the opinion, my In Starting Congress. performed properly should
that violating for of action cause federal the premise the from 891, Stat. Exchange ofAct Securities the of by the cloth whole of out created §78j(b), was C.S.U. the Judiciary also must the Judiciary, it concludes an such applicable to time the authority fashion ex- 10(b) litigation will history of the from pageA action. flawed. are conclusion premise why both plain was first violating § 10(b) for private cause Supp. F. Co., Gypsum National Kardon recognized right ac implied recognizing this 1946). In (ED Pa. a well- then was applied what merely Kirkpatrick Judge tion, our during most true was As law. federal rule settled en statute a presumed then courts history, remedy those for provided special class benefit acted Texas statute. by violations injured members (1916).1 39-40 S. U. Rigsby, 241 R. Co. & Pacific applied he when law” “new make did Kirkpatrick Judge stated unanimous Rigsby, v.Co. R. Texas Pacific presumption: it where act, and wrongful ais statute command disregard “A statute benefit especial whose class one damage results in default party from damages recover enacted, right was is but This . . . law. common a doctrine according to implied, S., 39-40. U. ibi remedium.” maxim, jusUbi application *15 presumption this a federal statute enacted for the benefit in investors securities that are in traded interstate commerce.
During ensuing 10(b) § four administering decades of litigation, applied the federal courts also settled when law they looked to governing law to state find rules the time- liness of claims. See DelCostello v. Teamsters, 462 U. S. (1983) dissenting).2 151, 172-173 J., It was not (Stevens, until 1988that a federal court decided it that would be better policyto have a uniform apply federal statute of limitations Systems claims kind. See In re Data Access Securi- (CA3). Litigation, agree ties 843 F. 2d I that such a preferable uniform limitations rule is to the often chaotic tra- approach looking analogous ditional state limitation. I Congress, believe, however, rather than the Federal Judiciary, responsibility making has the policy for deter- required rejecting minations that are in a rule selected under borrowing, long applied § the doctrine of state cases, choosing period a new limitations and its toll- associated ing legislature rules.3 When gov- enacts a new rule of law erning legal usually timeliness of action, it can—and specify the effective date of the rule determine does— pending extent to which it g., shall claims. See, e. quoted 5114, Stat. ante, 364, n. 10. When the Court lawmaking into this ventures inevitably arena, however, it questions concerning raises retroactivity of its new rule arguably that are difficult and inconsistent with the neutral, judges Federal have ‘borrowed’ state statutes of limitations because they were directed to so Congress do of the United States under the Act, Rules of Decision § 28 U. S. C. 1652. Teamsters, DelCostello S.,U. (Stevens, J., at 172-173 dissenting); Agency see Holding also Corp. Malley-Duff Inc., Associates, (1987) 143, 483 U. S. 167-165 (Scalia, J., concurring judgment). 3Congress is perfectly capable making these decisions. con When fronted same need uniformity in treble-damages litigation the antitrust laws it Clayton enacted 5 of the pro Act to vide a 4-year limitations. See 69 Stat. U. S. C. 15b. *16 v.Co. Oil judge. Chevron See role of nonpolicymaking at 2d, F. Access, (1971); 843 Data In re U. S. Huson, 404 dissenting). (Seitz, J., applying a rule traditional rejection of the The Court’s is is silent statute period when state major- Despite the prior cases. by Court’s justified this not effec- it at ante, rule, traditional recognition ity’s “[o]nly analo- no holding where by that tively repudiates it statute] should is available [within the counterpart gous principles.” state-borrowing apply proceed to then a court justification for de- this principal The Court’s 359. Ante, at I supra. DelCostello, similar parture it took is that those to similar for reasons my case that registered dissent nothing in stat- today. there was In that case express I depart Congress to intended that believe me to lead ute analogous limita- looking state practice of settled our from I can find case, this Likewise at 171-173. Id., tions. me leads that Exchange of 1934 Act nothing Securities in the tra- depart from our Congress us to intended that to believe law. of established decades four overrule rule ditional Agency primarily relies, Court which case on The other Inc., 483 U. S. Associates, Malley-Duff Corp. Holding Agency Hold- case. distinguishable from (1987), been that had change of law in a rule a ing involve did Court case, Furthermore, in that years. for 40 settled remedy private pattern the RICO explicit intent found an remedy. rem- The private antitrust Clayton Act’s after 4-year of limi- subject statute to Clayton was Act edy in Congress reasonably that inferred Court tations, statutes. to both the same wanted pattern intent a similar found has not The subject sections those Exchange 1934after of Act Securities 359-361. ante, l-and-3-year limitation. ato today may well makes the Court policy that choices the recommen- they though are at odds wise—even a sufficient is not that Branch—but Executive dation justification making change in what was well-settled during years law between governing impliedly timeliness of action authorized a federal statute. recognized This Court has statutory that a rule of construc- consistently applied tion has been for several decades acquires clarity simply beyond peradventure.” that “is Herman & MacLean v. Huddleston, 459 U. (1983). I believe that the Court should continue to observe principle in this case. The departure Court’s occasional principle from justify today’s does not refusal to com- ply with the g., Rules of Decision Act. e. See, Shearson/ *17 Express American Inc. v. McMahon, 482 U. (1987) dissenting). Accordingly, J., respect- (Stevens, I fully dissent. Kennedy
Justice O’Connor, with whom Justice joins, dissenting. agree
I
predictability
judicial
that
economy
counsel the
adoption of a uniform federal statute of
for
limitations
actions
brought
under
and Rule 10b-5. For the reasons
by
stated
however, I believe we should
Justice Kennedy,
adopt
1-year-from-discovery-rule,
the
3-year pe-
but not the
repose.
riod of
separately
I
only
express
write
my
dis-
agreement with the
Court’s
in
decision Part IV to
the
period
new limitations
holding
in
respond-
this
case.
that
ents’ suit
is time barred
a
limitations
that did
today,
not exist
departs
before
drastically
the Court
from our
practice
injustice
established
respond-
inflicts an
on the
ents.
explain
The Court
unprecedented
declines to
its
deci-
acknowledge
sion, or
even
its unusual character.
Respondents, plaintiffs below, filed this
Federal
agrees
District
Everyone
Court
1986.
that,
time,
at that
governed by
their claims were
the state statute of limitations
analogous
for the most
state cause of action. This was man-
dated
binding
solid wall of
authority
Ninth Circuit
dat-
case
353.
ante,
years.1
than
ing
more
back
for
Appeals
Court
the
Court
District
the
proceeded
changed;
never
law
the
time,
During that
years.
four
almost
analogous
the
period remained
limitations
governing
the
respondents’
Notwithstanding
limitations.2
statute
state
the Court
period,
limitations
this
on
reliance
entirely proper
untimely be-
dismissed
must
suit
their
holds
now
comply with
did
respondents
cause
period
the
years after
today
time
first
the
—472
for
announced
courthouse
shuts
simply,
Court
Quite
filed.
was
suit
predict
they
unable
were
because
respondents
on
door
future.
matter-of-
Court’s
from
impression
get the
might
One
our stand-
retroactivity
issue
handling
fact
comprises, after
opinion
the Court’s
IV
Part
practice.
ard
1-and-
out
sets
sentence
first
only
sentences:
two
all,
complaint is
respondents’
states
second
rule;
3-year
Surely, one
rule.
comply with
untimely
failure
ordi-
anything out
doing
were
Court
if
think,
might
fact.
on
comment
nary, it would
an-
occasions,
several
has, on
This
not.
Apparently
today, however,
Until
limitations.
statutes
new
nounced
period retroac-
applied new never
had
the Court
so
rule
new
announced
it
very
in which
*18
case
tively
binding Circuit
timely was
action
bar
as to
evaluate
instead
been
has
practice
Our
precedent.
reserving
new
period,
old
hand
case
cases.
future
application
rule
(1980); Williams
641, 644
Co., 649
2dF.
&Witter
v. Dean
Robuck
1 See
In
Hinton
E.
Glenn
Douglass v.
(1976);
1383, 1387
Sinclair,
2d
F.
529
v.
Harris,
&
Upham
(1971); Hecht
v.
912, 914-916
Inc.,
vestments,
2d
F.
440
Smith, Inc.
v.
Properties,
Royal Air
(1970);
1202, 1210
Co., 2dF.
(1953).
627, 634-635
Robinson, 2d
F.
(1962); Fratt
v.
210, 214
2d
F.
Co.,
We followed
years
the same course several
later
in Saint
College
Francis
Al-Khazraji,
Chevron Oil College Saint Francis are based on funda- justified mental notions of process. reliance and They due straightforward reflect application of an earlier line of cases *19 holding that it process apply violates due a pe- limitations retroactively riod thereby deprive party arbitrarily aof Iseminger, 185 v. Wilson See in court. heard be
right to Savings Co. Trust (1902);Brinkerhoff-Faris 55, 62 S.U. surprisingly, (1930). Not 681-682 U. S. Hill, Francis Saint andOil in Chevron decision Court's the then, retroactively periods apply new College not Court: the among Members disagreement no generated Justice, one but all joined was Oil in Chevron opinion The Francis Saint question; retroactivity the reach not did who unanimous. College was eight Term, Only last statute applicable specifying decisions that rule
sense Truck- American prospectively. only apply limitations ing ques- (1990). The S.U. Smith, Assns., Inc. earlier an Trucking whether was American presented tion unconstitutional striking down the Court— decision particular apply retroac- scheme—would tax highway state not ruling would why the explaining course tively. heavily on relied opinion plurality retroactively, cases: statute our considering
“When Court limitations, the defining statutes newly sions old on reliance taken on focused has action. filing period usually, limitation — been have would that claim filed litigant aWhere has period, limitation prior timely his bar would limitation statute new that held 193-194. Id., suit.” Justices, other Four reaf contexts, other apply analysis should
retroactivity dissent limitations. statutes application its firmed inequita “most would it explicitly stated ing Justices rights’” his ‘“slept on ha[s] plaintiff [a] [hold] ble could defendant nor he neither in which during a case.” applied limitation time known dissenting), J., (Stevens, supra, at Trucking, American supra, at 108. Oil, Chevron quoting *20 Trucking, After American vitality continued of Chev- ron respect Oil with to statutes of limitations is—or should nothing irrefutable; in James B. Distilling Beam be— Co. v. Georgia, post, p. 529, alters this fact. present The case indistinguishable from Chevron Oil and appli- retroactive cation should therefore be denied. All three Chevron Oil factors are met. adopting First, in a federal statute of limi- tations, the clearly Court overrules prece- established Circuit dent; the Court admits as much. Ante, at 353. Second, the explains that “the interes[t] in predictability” demands uniform standard. Ante, agree, at 357. I but surely predictability cannot applying favor retroactively a lim- period itations respondents that the possibly could not inequitable foreseen. Third, the results are obvious. After spending years in court and tens of thousands of dollars attorney’s respondents’ fees, suit is dismissed for failure comply with a that did not exist until today.
Earlier this Term, the Court observed that “the doctrine
of stare decisis serves profoundly important purposes in our
legal system.”
v. Acevedo,
The Court’s treatment of the retroactivity ques- tion cannot oversight. be an parties briefed the issue in this Court. See Respondents Brief for Reply 45-48; Brief for Petitioner 18-20. In addition, the filing United States, an amicus curiae brief on behalf of the Securities and Ex- change Commission, addressed the explicitly, issue urging the Court to remand so that the may lower court address the retroactivity question in the first instance. Nevertheless, unexplained, chooses unknown reasons Court, for unfairness unprecedented visiting thereby issue, ignore the respondents.
on *21 agreed with Iif Even opinion. Court’s the of IV Part from dissent I would Court, limitations statute federal the that dictate prior cases Our retroactively. I applied not today should announced the in may determine courts lower the that so remand would lawsuit. respondents’ the timeliness instance first Kennedy, Justice dissenting. that, determination Court’s the with agreement full in I am limitations statute federal uniform precedents,.a our 10(b) § brought under private actions for appropriate adopt as should we that 1934 Exchange ofAct Securities Congress rule 1-year-from-discovery period the limitations a note I must Act. 1934 provisions in various employed simultaneous Court’s with however, disagreement, my em- Congress also repose period 3-year adoption of abso- This provisions. Act’s 1934 a number ployed in traditional 10(b) § conflicts suits private on bar time lute frustrates actions, fraud-based for periods limitations investors, 10(b) defrauded protecting usefulness implied federal a on limitations practical severe imposes component of essential an become has of action cause injured been who investors gives law protection practices.
by unlawful express absence recognizes, theAs general matter aas statute, courts federal a tations period or, limitations analogous state most apply the should does rule This period at all. no cases, in rare law in federal elsewhere from rule “when however, apply, stat- state available analogy than closer provides a clearly practical- policies at stake when utes, and appro- more significantly rule litigation make ities lawmaking.” DelCostello interstitial priate vehicle (1983); Teamsters, 151, U. see Reed v. United (1989). Transportation Applying Union, 488 U. S. principle, express private the Court looks first to the rights of action in the 1934Act itself to find what it believes appropriate periods are the here. One analysis; given cannot fault the Court’s mode of implied actions are under the Act, it makes sense for us periods Congress to look to the limitations established under supra, the Act. DelCostello, at 171; United Parcel Service, Inc. Mitchell, U. S. 68, n. That obligation reject not relieve us, however, does of our significantly limitations rule that would “frustrate or inter- policies.” with federal Reed, fere S.,U. at 327. When determining appropriate apply, statute of limitations to *22 give policies underlying we must careful consideration to the practical aggrieved a statute and to the difficulties parties may establishing in have a Ibid.; violation. Wilson Garcia, v. 471 261, U. S. 268 specific is not a
This case where the Court identifies a stat- ute and each follows its terms. of As the Court is careful to provide single note, the 1934Act does not private brought express provisions. for all actions under its separate Rather, the Act three makes and distinct references rejects to outright of statutes limitations. The Court one 2-year repose of references, these statute of for actions § brought §78p(b), under 16 of the 1934 Act, 15 S.U. C. and 78r(c). §§ purports 78i(e), to follow other the two. The lat- employ 1-year, 3-year ter two references schemes similar to one the Court unique establishes but here, each has its own wording. identify any The Court does not reasons for find- ing controlling, unnecessary engage one to be so it is to in grammatical separate 1-year close construction to discov- ery period 3-year repose. from the statute of greater importance is of even
It to note that both of the question express statutes relate to causes of action which purpose underlying in their rationale differ from causes 376 statutes 10(b). § under implied action inor, liability violations strict apply to refers which § 9 of remedy under rarely used 78i(e), § case Regula- Securities Fundamentals Loss, L. Act. action a cause 1988). relates Neither (2d ed. tion 10(b). § implied coverage of scope and under- model fraud common-law on rest either does Nor 10(b) § actions. lying most 10(b) Section markets. securities practices fraudulent from
tions
operating
provision
antifraud
comprehensive
aas
Intended
10(b)
§
application,
no
laws
specific
more
when
even
purchase
connection
employ in
unlawful
it
makes
device
deceptive
or
manipulative
“any
security
any
sale
or
Exchange
Securities
in violation
contrivance”
or
Congress
Although
78j.
§C.S.U.
rules.
Commission’s
enforcing
sec
role
primary
gave
Commission
en
tool
“an essential
constitute
suits
private
tion,
Inc.
Basic
requirements,”
Act’s
forcement
necessary
“‘a
(1988),
are
S.U.
Levinson, 485
Eichler, Hill
Bateman
action.’”
Commission
supplement
(1985)(quoting
S.U.
Berner, 472
Richards, Inc.
(1964)).
haveWe
426, U. S.
Borak, 377
v.Co.
I. Case
J.
“sup
10(b) litigation
facilitating
rules
clear
it
made
Act”
in the
policy embodied
congressional
port]
supra, Basic,
fraud.
securities
forms
combating all
*23
245.
private
bringing legal obstacles
practical
The
is es-
jurisdiction
Once
significant.
10(b)
are
§
are
prove elements
must
10(b) plaintiff
§ tablished,
Her-
fraud.
common-law
for
in actions
those
similar
(1983). Each
S.U.
Huddleston, 459
v.
MacLean
&man
material
or
misleading statement
or
a false
proof
requires
S.U.
Green,
Industries, Inc.
Fe
omission, Santa
id.,
cf.
243;
S., at
U.
Basic,
thereon,
(1977), reliance
“fraud-on-the-
10(b)
proving
§
cases
presumed
(reliance
market”), damages
wrongdoing,
caused
Randall v.
Lofksgaarden,
(1986),
Litigation,
with
actions
fraud
constrain
minority of States
Only small
a
permit
typically
do
those
repose, and
periods of
absolute
g.,
e.
See,
years.
five
at least
brought within
be
to
actions
Ky.
repose);
period of
(5-year
(1991)
§95.11(4)(e)
Stat.
Fla.
period of
1990)(10-year
(Michie
§ 413.120(11)
Ann.
Stat.
Rev.
period of
(10-year
(1986)
§516.120(5)
Stat.
Rev.
repose); Mo.
of
importance
recognized the
has
Congress itself
repose).
discover
time
reasonable
a
fraud
victims
granting
against its
a case
prepare
fraud
underlying the
facts
Disclo
Full
Sales
Land
g., Interstate
e.
See,
perpetrators.
brought
may
(action
be
1711(a)(2)
§C.S.
15 U.
Act,
sure
violation);
Trad
Insider
discovery of
years from
three
within
Act
Enforcement
Fraud
Securities
ing and
five
brought within
may
(action
be
§78t-1(b)(4)
C.S.U.
not.
however, does
violation).
Court,
The
years
as
repose, even
statute
A reasonable
may some-
It
merits.
its
without
is
actions,
fraud-based
than
occurred
fraud
when
determine
easier
be
times
important,
more
But
discovered.
been
have
it should
when
important consider-
promote
general
periods
be
cannot
fact
determinations
“Just
of fairness.
ations
memories
time,
passage of
when, because
made
Wilson,
lost.”
is
evidence
or
faded
witnesses
my
considerations,
Notwithstanding these
271.
S.,U.
inconsistent
is
bar
time
3-year absolute
is
view
congres-
litigation
§ realities
practical
1-year-from-
remedy. underlying policies
sional
between
balance
fair
ensure
discovery
sufficient
is
rule
investors,
aggrieved
legitimate interests
protecting
moreover,
case,
extreme
In the
claims.
stale
preventing
yet
discovery
its
alleged fraud
period between
when
princi-
equitable
may
length,
extraordinary
courts
claim.
permit the
unfair
it
should
laches
ples
such
Armbrecht,
Holmberg v.
162;
atS.,U.
DelCostello,
*25
3-year
10(b)